As already noted in today's previous reviews of the euro and the pound, at last week's trading, the "American" weakened against all its main competitors. In this context, the Japanese yen was no exception, which rose by 0.80% against the US dollar. I fully assume that such price dynamics of the US dollar are influenced by the increasing pace of universal vaccination against the COVID-19 pandemic. As you know, in the moments of aggravation of the coronacrisis, investors preferred the US dollar as a protective asset, which led to increased demand and the growth of the US currency. Also, despite the faster pace of recovery of the US economy from the effects of COVID-19, the Chairman of the Federal Reserve System (FRS) of the United States, Jerome Powell, was very restrained about the immediate timing of the normalization of monetary policy, and the rhetoric of his recent speeches was mostly "dovish." In this regard, the Fed's decision on rates and the subsequent press conference of the head of the Federal Reserve will be extremely important. It is unlikely that rates will change, so the focus of investors will again be on Jerome Powell's speech. I believe that this week, on Wednesday, the Fed will be the focus of market participants' attention. In the meantime, let's look at a few charts of the USD/JPY currency pair, and, given Friday's closing of trading, let's start with the weekly timeframe.
Weekly
As a result of the downward dynamics at the auction on April 19-23, the dollar/yen currency pair fell to 107.48 but managed to rebound from this mark and ended the last five-day trading at 107.87. Nevertheless, the last three bearish candles have quite large bodies. The closing of the last candle under the red line of the Tenkan Ichimoku indicator only emphasizes the already quite strong bearish sentiment. At the moment of writing, the pair tests the orange 144 exponential moving average for a breakdown, closing weekly trading, which will further indicate a bearish mood for this trading instrument. However, the week's closing at 144 EMA will not be enough to continue the movement in the southern direction. The downside players need to update the previous lows at 107.48 and close the weekly trading below this level.
Further, much will depend on the pair's ability to overcome the important and strong technical level of 107.00. An alternative scenario would be for the pair to return above the level of 108.70, where the red weekly Tenkan line of the Ichimoku indicator runs. Given the Fed's rate decision and Powell's press conference, both scenarios may occur. From a technical point of view, there are more prerequisites that the pair will continue its downward trend.
Daily
Friday's candle demonstrated that the bulls on the instrument have not yet laid down their arms and are strongly resisting. It can be judged by the long lower shadow of the candle for April 23 and the unwillingness of the quote to fall within the cloud of the Ichimoku indicator. Nevertheless, today, the pair is already trading in the cloud. At the end of the review, trading on USD/JPY is near 107.72, and before that, the pair has already visited 107.63. In this situation, the main trading recommendation for USD/JPY is sales, which are better to open after short-term pullbacks to the price zone of 107.90-108.05. If the pair is fixed above 108.30, the downward scenario will have to be adjusted.